Repealing N.C. CON laws would cut costs, boost access, study says

A typical North Carolina medical patient would save nearly $300 a year and have more competitive options for lower-cost treatment if outdated regulations didn’t exist, research shows.

Matt Mitchell, a senior research fellow and director of the Project for the Study of American Capitalism at the Mercatus Center at George Mason University, said North Carolina would have more hospitals, even in rural areas, if the state repealed certificate-of-need laws.

That finding contradicts objections the North Carolina Hospital Association routinely raises whenever the General Assembly debates proposals to repeal or roll back CON rules.

“They’re obviously a pretty concentrated, powerful group,” Mitchell said of the hospital association, while CON opponents are generally less well organized or funded.

“Hospitals are falling in number all around the country, but it turns out that they are falling faster in CON states relative to non-CON states through consolidation and bankruptcy, and just shutting their doors,” Mitchell said.

Those standing to gain the most from an end to CON laws are patients and taxpayers who would find more treatment options at lower cost, along with health-care entrepreneurs who want to open new facilities.

Mitchell said a Mercatus Center research team combined the results of several previous studies to come up with peer-reviewed findings. The studies compared the impact of North Carolina’s CON laws with outcomes in 15 states without those laws.

North Carolina imposes 25 CON restrictions. It’s one of 32 states with four or more CON regulations. Health-care providers cannot open or expand facilities, or buy certain equipment unless they undergo a time-consuming, rigorous application process. Existing health-care providers get to decide whether they need competition.

If the state did not impose CON regulations, health-care spending per capita would be $213 lower annually relative to states without CON, and savings on physician spending would be $73, the North Carolina study determined.

Among study conclusions:

North Carolina would have 187 hospitals instead of 132, and 99 ambulatory surgery centers instead of 85.

The state could support 80 rural hospitals instead of 56, and 13 rural ambulatory surgery centers instead of 11.

Mortality rates would drop from 15.1 percent to 14.7 percent for heart attack patients; 11.7 percent to 11.4 percent for heart failure; and 12.5 percent to 12 percent for pneumonia.

Overall death rates from post-surgery complications would fall by 5.3 percent.

The percentage of patients who would need to leave their home counties to get diagnostic scans would go down as well — by 5.5 percent for an MRI; 3.6 percent for a CT scan; and 3.7 percent for a PET scan.

Mitchell said the findings overall were statistically significant and most likely not random.

CON advocates say the regulations lead to better health outcomes, lower costs, and more options for poor and rural patients.

“It appears to be a repackaged consolidation of some of their previous reports. We have questions about the conclusions drawn, especially the contention that changes to CON would result in more hospitals and [ambulatory surgical centers] in rural communities. In the average rural North Carolina hospital, 75 percent of patients are covered by Medicaid or Medicare, or are uninsured, which already threatens the viability of existing hospitals,” hospital association spokeswoman Julie Henry said in an email.

Mitchell cautioned that repealing all CON laws would not immediately deliver the benefits suggested in the study. Time to build and staff new facilities would be needed, for example.

Still, he said, lawmakers should read the study, and not just listen to the market insiders seeking to protect their turf.